SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1998 ($250 fee required)
Commission File Number 333-19591
AMRESCO Commercial Mortgage Funding I Corporation
-------------------------------------------------
(Exact Name of registrant as specified in its charter)
Delaware 75-2683929
(State or Other Juris- (I.R.S. Employer
diction of Incorporation) Identification Number)
700 N. Pearl St. Suite 2400 Dallas, Texas 75201
- - ---------------------------------------------------------------
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (214) 953-7700
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ______
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Not applicable.
Aggregate market value of voting stock held by non-affiliates
of the Registrant as of December 31, 1997.
Not applicable.
Number of shares of common stock outstanding as of December 31,
1997. Not applicable.
TABLE OF CONTENTS
Part I
Item 1. Business 3
Item 2. Properties 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security Holders 3
Part II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters 4
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial
Condition And Results of Operations 4
Item 8. Financial Statements and Supplementary Data 4
Item 9. Changes in and Disagreements with Accountants on
Accounting And Financial Disclosure 4
Part III
Item 10. Directors and Executive Officers of the Registrant 4
Item 11. Executive Compensation 4
Item 12. Security Ownership of Certain Beneficial Owners and
Management 4
Item 13. Certain Relationships and Related Transactions 4
Part IV
Item 14. Exhibits, Financial Statements Schedules and Reports
on Form 8-K 5
Signatures 6
Exhibit Index 7
PART I
ITEM 1. BUSINESS
This Annual Report on Form 10K relates to the Trust
Fund formed, and the Commercial Mortgage Pass-Through
Certificates Series 1997-C1 issued pursuant to a Pooling and
Servicing Agreement, dated as of June 1, 1997 (the "Pooling and
Servicing Agreement"), by and among AMRESCO Commercial Mortgage
Funding I Corporation (the "Company"), as depositor, AMRESCO
Services, L.P. a division of AMRESCO Management, Inc. as
servicer, LaSalle National Bank as trustee, and ABN AMRO Bank,
N.V., as fiscal agent. The Certificates have been registered
pursuant to the Act under a Registration Statement on Form S-3
(No. 333-19591) (the "Registration Statement").
Capitalized terms used herein and not defined have
the same meanings ascribed to such terms in the Pooling and
Servicing Agreement.
This Annual Report is being filed by the Servicer, in
its capacity as such under the Pooling and Servicing Agreement,
on behalf of Registrant. The information reported and
contained herein has been supplied to the Servicer by one or
more of the Borrowers or other third parties without
independent review or investigation by the Servicer. Pursuant
to the Pooling and Servicing Agreement, the Servicer is not
responsible for the accuracy or completeness of such
information.
ITEM 2. PROPERTIES
Not applicable.
ITEM 3. LEGAL PROCEEDINGS
Except for claims arising in the ordinary course of
business and which are covered by liability insurance, there
are no material pending legal proceedings involving the Trust
Fund, the Mortgages comprising the Trust Fund or the Trustee or
the Servicer with respect to or affecting their respective
duties under the Pooling and Servicing Agreement.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of
Certificateholders during the fiscal year covered by this
report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
There was one registered holder of the Certificate
representing an equity interest in the Trust as of December 31,
1998. To the Registrant's knowledge, as of that date, there
was no principal market in which the Certificates representing
an equity interest in the Trust were traded.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Not applicable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
The information required by Items 10, 11, 12 and 13
is not applicable as the Trust Fund does not have directors or
officers and Certificateholders have no right to vote (except
with respect to required consents to certain amendments to the
Pooling and Servicing Agreement and upon certain events of
default) or control the Trust Fund.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) 1. Servicer's Annual Statement of compliance for the
period ended 12/31/98.
2. Servicer's Independent Accountant's Report on
Servicer's servicing activities.
(b) Current Reports on Form 8-K for the Trust were filed on
January 26, 1998; February 17, 1998;
March 25, 1998; April 17, 1998; May 27, 1998; June 17,
1998; July 17, 1998; August 26, 1998;
September 1, 1998; October 20, 1998; November 17, 1998;
and December 18, 1998.
(c) No consent of auditors with respect to the audit reports
filed herewith are required.
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on behalf of the Registrant by the
undersigned thereunto duly authorized.
AMRESCO MORTGAGE CAPITAL, INC.
AS GENERAL PARTNER OF AMRESCO
SERVICES, L.P., IN ITS CAPACITY AS
SERVICER UNDER THE POOLING AND
SERVICING AGREEMENT
ON BEHALF OF AMRESCO COMMERCIAL
MORTGAGE FUNDING I CORPORATION,
REGISTRANT
By:
/s/ Sean Reilly
Name: Sean Reilly
Title: Vice President
By:
/s/ John W. Benson
Name: John W. Benson
Title: Assistant Secretary and
Deputy General Counsel
Date: March 17, 1999
EXHIBIT INDEX
Exhibit No. Description
99.1 Servicer's Annual Statement of Compliance.
99.2 Servicer's Independent Accountant's Report on
Servicer's servicing activities.
EXHIBIT 99.1
SERVICER'S ANNUAL STATEMENT OF COMPLIANCE
(See Attached)
April 22, 1999
BY CERTIFIED MAIL
RETURN RECEIPT REQUESTED
LaSalle National Bank
135 South LaSalle Street
Suite 1740
Chicago, Illinois 60674-4107
Attn: Asset Backed Securities Trust Services Group - AMRESCO,
Series 1997-C1
Ladies and Gentlemen:
Reference is made to the Pooling and Servicing Agreement dated
as of June 1, 1997, among AMRESCO Commercial Mortgage Funding I
Corporation, as Depositor, AMRESCO Services, a division of
AMRESCO Management, Inc. ("AMI"), as Master Servicer , Midland
Loan Services, L.P., as Special Servicer, LaSalle National
Bank, as Trustee, and ABN AMRO Bank N.V. as Fiscal Agent
entered into in connection with AMRESCO Commercial Mortgage
Funding I Corporation Mortgage Pass-Through Certificates,
Series 1997-C1 (the "PSA"). Effective August 1, 1997, AMI
delegated all of its rights, duties and obligations under the
PSA to AMRESCO Services, L.P. ("AMRESCO").
As Senior Vice President of AMRESCO, I have delegated to
specified officers ("Officers") the responsibility for
reviewing and monitoring the activities of AMRESCO and our
performance under the Agreement.
Accordingly, pursuant to Section 3.14 of the PSA and in
accordance with certifications made to me by each of the
Officers, AMRESCO certifies the following:
(1) A review of the activities of AMRESCO for the period
from January 1, 1998 to December 31, 1998, and of its
performance under the PSA has been made under the
supervision of the Officers, who have in turn been under my
supervision;
(2) To the best of my knowledge and the Officers' knowledge,
based on such review, AMRESCO has fulfilled its obligations as
Master Servicer in all material respects under the PSA
throughout the period from January 1, 1998 to December 31,
1998;
LaSalle National Bank
April 22, 1999
Page 2
(3) To the best of my knowledge and the Officers' knowledge,
based on such review, each related sub-servicer has fulfilled
its obligations under its sub-servicing Agreement in all
material respects; and
(4) To the best of my knowledge and the Officers' knowledge,
AMRESCO has not received any notice regarding qualification, or
challenging the status, of REMIC I, REMIC II or REMIC III as a
REMIC from the IRS or any other governmental agency or body.
Please refer to the enclosed independent accountants' report
dated February 4, 1999, delivered pursuant to Section 3.15 of
the PSA, which discusses the results of their review of our
activities under this Agreement and which is incorporated
herein by reference.
Very truly yours,
/s/ Daniel B. Kirby
Daniel B. Kirby
Senior Vice President
AMRESCO Services, L.P.
Enclosures
cc: AMRESCO Commercial Mortgage Funding, L.P.
700 North Pearl Street
Suite 1600
Dallas, Texas 75201-7424
Standard & Poor's Rating Service
26 Broadway, 10th Floor
New York, New York 10004
Attn: CMBS Surveillance
Fitch Investors Service, L.P.
One State Street Plaza
New York, New York 10004
Attn: CMBS Surveillance
EXHIBIT 99.2
SERVICER'S INDEPENDENT ACCOUNTANT'S
REPORT ON SERVICER'S SERVICING ACTIVITY
(See Attached)
February 4, 1999
Deloitte & Touche LLP
Texas Commerce Tower
220 Ross Avenue
Suite 1600
Dallas, Texas 75201
Dear Sirs:
As of and for the year ended December 31, 1998, AMRESCO
Services, L. P., a subsidiary of AMRESCO, INC., has
complied in all material respects with the minimum
servicing standards set forth in Appendix A. Such
standards were established by AMRESCO Services, L. P. based
on Mortgage Bankers Association of America's Uniform Single
Attestation Program for Mortgage Bankers (USAP).
A list of the securitized and bond-related servicing
contracts covered by this representation is included in
Appendix B.
For the period January 1, 1998 through December 30, 1998,
AMRESCO Services, L. P. had in effect a fidelity bond in
the amount of $23,000,000, errors and omissions liability
coverage in the amount of $10,000,000, and mortgage
impairment protection in the amount of $23,000,000.
Beginning December 31, 1998, AMRESCO Services, L. P.
increased its coverage, resulting in a fidelity bond in the
amount of $43,000,000, and mortgage impairment protection
in the amount of $43,000,000. Errors and omissions
liability coverage remained at $10,000,000.
/s/ Donnie M. Skidmore February 4, 1999
Donnie M. Skidmore Date
President
/s/ Daniel B. Kirby February 4, 1999
Daniel B. Kirby Date
Senior Vice President
Appendix A, Page 1
AMRESCO Services, L. P. Servicing Standards
I. CUSTODIAL BANK ACCOUNTS
1. Reconciliations shall be prepared on a monthly basis
for all custodial bank accounts and related bank
clearing accounts. These reconciliations shall:
be mathematically accurate;
be prepared within forty-five (45) calendar days after the
cutoff date;
be reviewed and approved by someone other than the person
who prepared the reconciliation; and
document explanations for reconciling items. These
reconciling items shall be resolved within ninety (90) calendar
days of their original identification.
2. Each custodial account shall be maintained at a
federally insured depository institution in trust for
the applicable investor.
3. Escrow funds held in trust for a mortgagor shall be
returned to the mortgagor within thirty (30) calendar days of
payoff of the mortgage loan.
II. MORTGAGE PAYMENTS
1. Scheduled mortgage payments shall be deposited into the
custodial bank accounts and related bank clearing accounts
within two business days of receipt.
2. Scheduled mortgage payments made in accordance with the
mortgagor's loan documents shall be posted to the applicable
mortgagor records within two business days of receipt.
3. Scheduled mortgage payments shall be allocated to
principal, interest, insurance, taxes or other escrow items in
accordance with the mortgagor's loan documents.
4. Mortgage payments identified as loan payoffs or other
nonscheduled payments shall be allocated in accordance with the
mortgagor's loan documents.
III. DISBURSEMENTS
1. Disbursements made via wire transfer on behalf of a
mortgagor or investor shall be made only be authorized
personnel.
2. Disbursements made on behalf of a mortgagor or investor
shall be posted within two business days to the mortgagor's or
investor's records maintained by the servicing entity.
Appendix A, Page 2
AMRESCO Services, L. P. Servicing Standards
3. Tax and insurance payments shall be made on or before the
penalty or insurance policy expiration dates, as indicated on
tax bills and insurance premium notices, respectively, provided
that such support has been received by the servicing entity at
least thirty (30) calendar days prior to these dates.
4. Any late payment penalties paid in conjunction with the
payment of any tax bill or insurance premium notice shall be
paid from the servicing entity's funds and not charged to the
mortgagor, unless the late payment was due to the mortgagor's
error or omission.
5. Amounts remitted to investors per the servicer's investor
reports shall agree with canceled checks, or other form of
payment, or custodial bank statements.
6. Unused checks shall be safeguarded so as to prevent
unauthorized access.
IV. INVESTOR ACCOUNTING AND REPORTING
1. The servicing entity's investor reports shall agree with,
or reconcile to, investors records on a monthly basis as to the
total unpaid principal balance and number of loans serviced by
the servicing entity.
V. MORTGAGOR LOAN ACCOUNTING
1. The servicing entity's mortgage loan records shall agree
with, or reconcile to, the records of mortgagors with respect
to the unpaid principal balance on a monthly basis.
2. Adjustments on ARM loans shall be computed based on the
related mortgage note and any ARM rider.
3. Escrow accounts shall be analyzed, in accordance with the
mortgagor's loan documents, on an annual basis or as required
by the servicing agreement.
4. Interest on escrow accounts shall be paid, or credited, to
mortgagors in accordance with the servicing agreements.
VI. DELINQUENCIES
1. Records documenting collection efforts shall be maintained
during the period a loan is in default and shall be updated at
least monthly. Such records shall describe the entity's
activities in monitoring delinquent loans including, for
example, phone calls, letters and mortgage payment rescheduling
plans.
VII. INSURANCE POLICIES
1. A fidelity bond and errors and omissions policy shall be
in effect on the servicing entity throughout the reporting
period in the amount of coverage represented to investors in
management's assertion.
Appendix B, Page 1
AMRESCO Services, L. P.
Following is a list of the securitized and bond-related
servicing contracts which are covered by the attached USAP
representation.
Contract Date Reference Name Seller, Depositor or other Primary Party
Aug. 1, 1991 RTC 1991 M-1 Resolution Trust Corporation
Nov. 1, 1991 RTC 1991 M-5 Resolution Trust Corporation
Mar. 1, 1992 RTC 1992 C-2 Resolution Trust Corporation
Apr. 1, 1992 RTC 1992 C-3 Resolution Trust Corporation
Sept. 1, 1992 RTC 1992 C-6 Resolution Trust Corporation
Nov. 1, 1992 RTC 1992 C-8 Resolution Trust Corporation
Jan. 1, 1993 RTC 1993 C-1 Resolution Trust Corporation
Mar. 15, 1993 Investors Savings 1988-A NationsBank of Virginia, N.A.
Aug. 12, 1993 Ross Park Mall 1993-A Penn Ross Joint Venture
Sept. 10, 1993 Salomon 1993 C-1 Salomon Brothers Mortgage
Securities VII, Inc.
Oct. 26, 1993 Kidder 1993 C1 (Crown) Kidder Peabody Acceptance
Corporation I
Nov. 12, 1993 DLJ 1993 MF17 DLJ Mortgage Acceptance Corp.
Dec. 1, 1993 New England 1993-1 New England Mutual Life
Insurance Company
Feb. 1, 1994 Forest City 1994-1 Nomura Asset Securities
Corporation
Apr. 5, 1994 Freehold Raceway Mall Freemall Finance, Inc.
June 1, 1995 NationsBanc 1995 M2 NationsBanc Mortgage Capital
Corporation
Aug. 15, 1995 Lakewood 1995 C-1 Lakewood Mall Finance Company
Sept. 1, 1995 Oregon 1995-1 Oregon Commercial Mortgage,
Inc. 1995-1
Oct. 1, 1995 Nomura 1995 MD IV Asset Securitization Corporation
July 1, 1995 JP Morgan 1995 C-1 J.P.Morgan Commercial Mortgage
Finance Corp.
Jan. 1, 1996 JP Morgan 1996 C-2 J.P. Morgan Commercial Mortgage
Finance Corp.
June 1, 1996 JP Morgan 1996 C-3 J.P. Morgan Commercial Mortgage
Finance Corp.
Apr. 2, 1996 Nomura 1996 MD V Nomura Asset Securities Corporation
May 1, 1996 NationsLink 1996-1 NationsLink Funding Corporation
May 29, 1996 Equitable S/A 174 The Equitable Life Assurance
Society of the U.S.
June 28, 1996 Colonial Realty LP Colonial Realty Limited
Partnership
July 1, 1996 Security Capital Atlantic Security Capital Atlantic
Multifamily, Inc.
Aug. 1, 1996 Crystal Mortgage 1996-1 Crystal Run Property, Inc.
Oct. 1, 1996 SASCO 1996 C-1 Structured Asset Securities
Corporation
Oct. 23, 1996 Nomura 1996 D-3 Asset Securitization Corporation
Nov. 25, 1996 Hospitality 1996 C-1 Hospitality Properties Mortgage
Acceptance Corp.
Dec. 17, 1996 Nomura 1996 MD VI Asset Securitization Corporation
Dec. 17, 1996 Potomac Gurnee Finance Potomac Gurnee Finance Corp.
Appendix B, Page 2
AMRESCO Services, L. P.
Contract Date Reference Name Seller, Depositor or other Primary Party
Feb. 1, 1997 IDB 1993-A Nomura Securities International, Inc.
Feb. 6, 1997 JP Morgan 1997 C-4 J.P. Morgan Commercial Mortgage
Finance Corp.
Mar. 27, 1997 Nomura 1997 D-4 Asset Securitization Corporation
Apr. 30, 1997 Franklin Park Finance Franklin Park Finance, Inc.
Apr. 30, 1997 Willowbrook Finance Willowbrook Finance Corporation
June 30, 1997 MSCI 1997 HF1 Morgan Stanley Capital I, Inc.
June 30, 1997 MSCI 1997 WF1 Morgan Stanley Capital I, Inc.
July 8, 1997 ACMF 1997 C-1 AMRESCO Commercial Mortgage
Funding I Corp.
Aug. 14, 1997 GSM 1997-GL I GS Mortgage Securities Corporation II
Sep. 29, 1997 SASCO 1997 C-1 Structured Asset Securities Corporation
Oct. 24, 1997 Nomura 1997 D-5 Asset Securitization Corporation
Nov. 3, 1997 USC Oakbrook 1997-1 USC Oakbrook, Inc.
Nov. 25, 1997 CSFB 1997-PS1 Credit Suisse First Boston Mortgage
Securities Corp.
Dec. 1, 1997 BSF Participation Trust BSF III Limited Partnership
Feb. 4, 1998 Nomura 1998-ST I Nomura Depositor Trust ST I
Feb. 27, 1998 FNMA 1998-M1 Federal National Mortgage Association
Mar. 1, 1998 MSC 1998-WF1 Morgan Stanley Capital I, Inc.
Mar. 1, 1998 FUL 1997-C2 First Union Commercial Mortgage
Securities, Inc.
Mar. 1, 1998 Lehman 1998-C1 Structured Asset Securities Corporation
Mar. 27, 1998 MSC 1998-HF1 Morgan Stanley Capital I, Inc.
Mar. 27, 1998 Nomura 1998-D6 Nomura Asset Securities Corporation
Mar. 30, 1998 DMARC 1998-C1 Deutsche Mortgage and Asset
Receiving Corporation
Apr. 29, 1998 MCF 1998-MC1 Mortgage Capital Funding, Inc.
Apr. 29, 1998 SASCO 1998-C2 Structured Asset Securities Corporation
May 15, 1998 GS 1998-GSFL I GS Mortgage Securities Corporation II
Jun. 1, 1998 MSC 1998-WF2 Morgan Stanley Capital I, Inc.
Jun. 1, 1998 MSC 1998-XL1 Morgan Stanley Capital I, Inc.
Jul. 7, 1998 Telcom/Goldman Telcom Properties,Ltd.
Aug. 27, 1998 MSC 1998-CF1 Morgan Stanley Capital I, Inc.
Sept. 30, 1998 CAPCO 1998-D7 CAPCO America Securitization Corp.
Oct. 27, 1998 CSFB 1998-PS2 Credit Suisse First Boston Mortgage
Securities Corp.
Dec. 30, 1998 MCF 1998-MC3 Mortgage Capital Funding, Inc.
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors of AMRESCO Services, L.P.:
We have examined management's assertion about AMRESCO Services,
L.P.'s (the "Company") (a wholly owned subsidiary of AMRESCO,
INC.) compliance with the Company's servicing standards
identified in the Appendix as of and for the year ended
December 31, 1998, included in the accompanying management
assertion. Such standards were established by the Company's
management based on the Mortgage Bankers Association of
America's Uniform Single Attestation Program for Mortgage
Bankers ("USAP"). Management is responsible for the Company's
compliance with these servicing standards. Our responsibility
is to express an opinion on management's assertion about the
Company's compliance based on our examination.
Our examination was made in accordance with standards
established by the American Institute of Certified Public
Accountants and accordingly, included examining, on a test
basis, evidence about the Company's compliance with the
servicing standards and performing such other procedures as we
considered necessary in the circumstances. We believe that our
examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the
Company's compliance with the servicing standards or its
servicing agreements.
In our opinion, management's assertion that AMRESCO Services,
L.P. complied with its established servicing standards
identified in the Appendix as of and for the year ended
December 31, 1998, is fairly stated, in all material respects.
/s/ DELOITTE & TOUCHE LLP
February 4, 1999
APPENDIX
AMRESCO SERVICES, L.P. SERVICING STANDARDS
I. CUSTODIAL BANK ACCOUNTS
1. Reconciliations shall be prepared on a monthly basis for
all custodial bank accounts and related bank clearing
accounts. These reconciliations shall:
be mathematically accurate;
be prepared within forty-five (45) calendar days after the
cutoff date;
be reviewed and approved by someone other than the person
who prepared the reconciliation; and
document explanations for reconciling items. These
reconciling items shall be resolved within ninety (90) calendar
days of their original identification.
2. Each custodial account shall be maintained at a federally
insured depository institution in trust for the applicable
investor.
3. Escrow funds held in trust for a mortgagor shall be
returned to the mortgagor within thirty (30) calendar days
of payoff of the mortgage loan.
II.MORTGAGE PAYMENTS
1. Scheduled mortgage payments shall be deposited into the
custodial bank accounts and related bank clearing accounts
within two business days of receipt.
2. Scheduled mortgage payments made in accordance with the
mortgagor's loan documents shall be posted to the
applicable mortgagor records within two business days of
receipt.
3. Scheduled mortgage payments shall be allocated to
principal, interest, insurance, taxes or other escrow
items in accordance with the mortgagor's loan documents.
4. Mortgage payments identified as loan payoffs or other
nonscheduled payments shall be allocated in accordance
with the mortgagor's loan documents.
III. DISBURSEMENTS
1.Disbursements made via wire transfer on behalf of a
mortgagor or investor shall be made only by authorized
personnel.
2. Disbursements made on behalf of a mortgagor or investor
shall be posted within two business days to the
mortgagor's or investor's records maintained by the
servicing entity.
3.Tax and insurance payments shall be made on or before the
penalty or insurance policy expiration dates, as indicated
on tax bills and insurance premium notices, respectively,
provided that such support has been received by the
servicing entity at least thirty (30) calendar days prior
to these dates.
4.Any late payment penalties paid in conjunction with the
payment of any tax bill or insurance premium notice shall
be paid from the servicing entity's funds and not charged
to the mortgagor, unless the late payment was due to the
mortgagor's error or omission.
5.Amounts remitted to investors per the servicer's investor
reports shall agree with canceled checks, or other form of
payment, or custodial bank statements.
6.Unused checks shall be safeguarded so as to prevent
unauthorized access.
IV.INVESTOR ACCOUNTING AND REPORTING
1.The servicing entity's investor reports shall agree with,
or reconcile to, investors' records on a monthly basis as
to the total unpaid principal balance and number of loans
serviced by the servicing entity.
V. MORTGAGOR LOAN ACCOUNTING
1.The servicing entity's mortgage loan records shall agree
with, or reconcile to, the records of mortgagors with
respect to the unpaid principal balance on a monthly
basis.
2.Adjustments on ARM loans shall be computed based on the
related mortgage note and any ARM rider.
3.Escrow accounts shall be analyzed, in accordance with the
mortgagor's loan documents, on an annual basis or as
required by the servicing agreement.
4.Interest on escrow accounts shall be paid, or credited, to
mortgagors in accordance with the servicing agreements.
VI.DELINQUENCIES
1.Records documenting collection efforts shall be maintained
during the period a loan is in default and shall be
updated at least monthly. Such records shall describe the
entity's activities in monitoring delinquent loans
including, for example, phone calls, letters and mortgage
payment rescheduling plans.
VII. INSURANCE POLICIES
1.A fidelity bond and errors and omissions policy shall be
in effect on the servicing entity throughout the reporting
period in the amount of coverage represented to investors
in management's assertion.
